Outlook: After a bullish weekly EIA inventory report, the energy complex has risen from pre-report lows. A 17.8 million barrel draw in total US petroleum inventories amid a surge in demand provides support. Current trade is still lower however with WTI off 50 cents, ULSD down 1.2 cents while RBOB is near unchanged.
Crude
- The EIA showed US crude stocks fell 4.584 million barrels last week, a much larger draw than the 800,000 barrel draw estimated by the API. A pre-report poll from Reuters suggested we could see a 2.1 million barrel draw.
- China has implanted increased travel restrictions and quarantine time frames after its first reported omicron case last week.
- Omicron makes up 3% of covid-19 cases in the U.S. with Delta making up the balance.
- U.S. import price growth slowed in November to 0.7% down from 1.5% in October.
- Export prices rose 18.2% year-over-year in November, reporting the largest gain since the series was first published in 1984.
- Vitol expects higher prices and volatility in 2022 due to lack of investment.
- As of 10:21 am CST: Brent crude oil down $0.41 to $73.21, US dollar index up 0.027 to 96.598 while the nearby e-mini S&P 500 futures contract is down 18.75 points to 4,618.25.
Diesel
- The EIA showed US distillate stocks fell 2.85 million barrels last week, greater than the API’s estimate for a 1 million barrel draw and countering a Reuters poll suggesting a 688,000 barrel build.
- China’s oil refiners ramped up output and increased oil production by 2.7% or by 3.97 million bpd in efforts to support a diesel shortage.
Gasoline
- The EIA showed US gasoline stocks fell 719,000 barrels last week. Yesterday afternoon the API estimated a 400,000 barrel build while a Reuters poll suggested a 1.6 million barrel build.
Propane
- Propane stocks fell 2.4 million barrels last week, today’s EIA report showed. US demand for propane was up 445,000 bpd to 2.06 million bpd, a 27.5% increase w/w.
Natural Gas
- Cold weather is forecasted for the U.S. and Europe leading into next week which assists in propping up natural gas with the nearby futures contract up 16.1 cents to 3.908.
Total Petroleum inventories in the US, including the SPR, continues to draw down.
